Alignment with the Blueprint Two objectives requires insurers in the London Market to harness data to drive strategic insights and accelerate digital transformation.
Data unification and democratization through next-gen technologies and platforms will be critical to insurers’ efforts to build data ecosystems aligned with market needs.
Data ecosystems underpinned by the right foundation can help insurers become customer-centric and unlock new value.
Continued geopolitical, economic and environmental uncertainty is re-defining the very nature of risk. These factors are compelling insurers to evolve at speed to keep up with customers’ expectations, respond to threats and deliver resilience.
Notably, even before COVID-19, the London insurance market sat on the cusp of digital transformation, with the pandemic further accelerating this evolution. According to a commissioned global analytics study conducted by Forrester Consulting on behalf of WNS, 75 percent of insurers experienced an upward growth in business performance despite the pandemic-related economic turbulence and the need to move to remote trading. The study further underlined the correlation between data analytics maturity and business performance.
However, it is fair to say that insurance companies have a long way to go in adopting a data-first approach. Research from International Data Corporation and Seagate reveals that a significant 68 percent of data available to enterprises remains untapped.1 As Lloyd’s sets out in its Blueprint Two journey, harnessing the real power of data will enable insurers to access valuable insights and achieve significant growth.
Agile analytical capabilities, accurate insights and enhanced decision-making all hinge on enterprise data quality. Therefore, it is imperative for insurers to embrace unified data definitions and governance, bring together data from disparate sources and create a single trusted source of truth.
Many insurers in Lloyd’s and the London Market find it challenging to drive uniformity in how they receive, capture and consolidate data. Claims, for instance, are often reported by brokers in non-standardized formats and with key data elements scattered throughout supporting documents. Considerable time is expended on extracting, checking and feeding this data into multiple systems to format and validate – resulting in inefficiencies that stifle the potential of analytical capabilities.
These time-consuming tasks expose insurers to data inconsistencies caused by human error and duplication, with legacy systems also contributing to operational inefficiencies. This eventually results in key data existing in silos – inaccessible to those who could derive value from it – with different functions working from different data sets.
Data insights are a fundamental capability in the move to digital. The challenge to achieving these can be attributed to poor data quality and a lack of requisite data governance. Both represent significant hurdles to data integration, slow data flow and contribute to a lack of context around data. However, change is on the horizon.
Enabling market digitization will be a Core Data Record (CDR)2 that is centrally stored, approved and validated for London Market insurance contracts. Companies are now looking at third-party platforms to facilitate data collection at the point of bind to produce and augment the CDR. These next-generation platforms can consolidate disparate enterprise data into a single source of truth by leveraging computing power, sophisticated analytics and Artificial Intelligence (AI).
AI-led data extraction and contextualization platforms are fast becoming the digital backbone for London Market operations. They are automating the extraction and ingestion of data from disparate sources, applying algorithms to generate contextualized information, and creating structured, harmonized datasets for decision-making. In doing so, they can reduce the cost of operations by 40-60 percent in a steady state, simplify processes such as risk selection and claims triaging, and unlock new, potentially transformative business insights.
Notably, such platforms help companies make sense of unstructured data – an issue that has plagued the insurance industry. Analysts at Gartner estimate that more than 80 percent of enterprise data today is unstructured and is growing three times faster than structured data.3
With the help of data ingestion, cleansing and contextualization tools, companies can uncover this untapped potential – whether using hand-written data from existing contracts or non-traditional data sources such as social media. In doing so, companies can access new insights and build hyperaccurate 360-degree views of their customers and their insurance needs. This can help improve risk sensing and profiling, facilitate personalized services and open up new ways to deliver value.
Much like data standards and data quality, data ownership also needs to shift for insurers to align their data ecosystems with the digital insurance marketplace. This means ensuring all relevant employees have access to necessary data and insights, from underwriters embracing new process standards and data-first approaches to product and marketing teams harnessing customer and market data to create new offerings.
To achieve this, insurers can integrate data from multiple silos into data lakes, unlocking new levels of intelligence in the process. Simultaneously, consistent data structures can generate trust in the data, accelerating the move toward actioning insights for business decisions.
With data poised to become the lifeblood of insurers, there is a shift in skillsets as well. According to research from Oxford Economics, 75 percent of jobs will require advanced digital skills by 2030, with data literacy and data visualization key among them.4
Next-generation visualization tools will help intuitively communicate data and thus enhance decision-making across the insurance industry. Employees will be able to interact with data directly, quickly understand its relevance and take action from this understanding.
The most exciting aspect of aligned data ecosystems is what comes next. Unified data enables insurers to experience transformative gains through the intelligent interplay of industry expertise, process excellence, technology and analytics – all of which require a robust, standardized data foundation.
Insurance platforms are already using data-powered insights and algorithmic underwriting to allow the creation and design of bespoke policies and real-time quotations. Initially, these solutions were launched by carriers for follow-only syndicates. However, this year, Willis Towers Watson (WTW) launched a joint broker and carrier platform, supporting multi-party complex specialty risks through an end-to-end digital journey.
These digital platforms handle administrative tasks and streamline data to allow underwriters to focus on higher-value aspects of their roles. This will create the requisite insights for insurers to become increasingly customer-centric, with human creativity focused on using data to find new ways to unlock value.
As the transition to digital gains momentum, this could spur movements such as open insurance, generate new business models and see the insurance industry focus on solving once-in-a-generation challenges through ethical insurance. The climate crisis is one such area, with Lloyd’s already collaborating with partners globally to create insurance products that enable a more sustainable world.
While the potential is significant, a gap remains. According to a commissioned global analytics study conducted by Forrester Consulting on behalf of WNS, 66 percent of insurers recognize data analytics as a critical priority for their business performance. Still, only 41 percent identify investing in data and analytics capabilities as one of their top three business initiatives.
Undoubtedly, what will enable Blueprint Two is for insurers to identify and implement the resources required to cleanse and consolidate data into a trusted source of reference and shift from data recording to decisioning. These steps will be critical to realizing the true potential of digital transformation.
To know more about how WNS is helping insurers align their data ecosystems, visit Insurance BPO | Lloyd's of London Insurance Solutions | WNS
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13 June 2023
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